What the Actuarial Values in the Affordable Care Act Mean

The Patient Protection and Affordable Care Act (PPACA) establishes four levels of coverage based on the concept of “actuarial value,” which represents the share of health care expenses the plan covers for a typical group of enrollees. As plans increase in actuarial value – bronze, silver, gold, and platinum – they would cover a greater share of enrollees’ medical expenses overall, though the details could vary across plans.

The levels of coverage provided for in the PPACA are central to the coverage people will get and how they will ultimately perceive the effects of the health reform law. But an actuarial value is not as intuitive for people as specific deductibles and other out-of-pocket costs. Additionally, estimates of deductibles and other coverage features were not released by the Congressional Budget Office during the legislative debate.

Because projections of deductibles are subject to variation in estimating techniques and databases used, to present the most likely range of out-of-pocket costs, the Foundation commissioned separate analyses from three different actuarial consulting firms to present a range of potential estimates.

The study is part of the new Kaiser Initiative on Health Reform and Private Insurance, which will inform federal and state policymakers as they implement the PPACA and examine the implications of changes in the private insurance market under the health reform law.